A Blue Print for an Information Technology Park in Moldova · TechHub London : community and workspace for tech entrepreneurs. Helps startups get better faster. London sites as well

German Economic Team Moldova

Jörg Radeke & Philip StedenGerman Economic Team Moldova

Berlin/Chişinău, April 2014

A Blue Print for an Information Technology Park in

Moldova

Policy Briefing Series [PB/04/2014]

German Economic Team Moldova 2

Intro: German Economic Team Moldova

� Mandate: Provide economic policy advice to the Moldova government

� Demand-oriented, strategic policy advice� Recent requests:

� Proposal for Reforming the Pension System� Realising the Potential of Moldova’s Information

Technology Sector� Moldova’s trade policy: Strategy, DCFTA and Customs

Union

� Also mandate for other countries:

� Ukraine

� Belarus


Why IT Parks?

Question: How to get IT Park concept right?

Current barriers to Moldova’s IT sector development

Benefits of (successful) IT Parks

• Stiff international competition

• Lack of qualified staff

• Challenging business climate

• Administrative burden

• …

• Overcomes current barriers

• Creates conditions that are more favourable than outside the park

• Attracts investments

• Boost to IT sector development


Types of IT Parks

� Many concepts including mix of the aboveQuestion: Which concept suitable for Moldova?

Established

Start-up

Research Commercial

Grassroots labs

University research

labs

accelerators

Incubators and

accelerators

Technology Parks

Coworkinglabs

Company

Centers

Company Labs /

Excellence Centers


Cornerstones of Moldova’s IT Park concept

1. Which target industries and companies?

International experience

Suited to Moldova’s requirements

2. Who should manage the park?

3. Which location?

4. What kind of buildings and facilities?

5. Which support services?

6. Education offer?

7. Incentives and regulatory exemptions needed?

Target

Management

Buildings

Support

Education

Incentives

Location

6

Statements and Investments

„When locating our company we

decided against San Fransico and in

favor of Berlin. Because many people

live here from all over the world, what

makes it easy for us to build our

international team. I am amazed by the

cultural and human variety of this city.“Ijad Madisch, CEO ResearchGate GmbH


Why do international investors come to Central and Eastern European Countries?(Moldova, Romania, Ukraine, Belarus)

All industries


Why do international investors come to Central and Eastern European Countries ?

Customer Contact Center, ICT & Internet Infrastruct ure, Shared Services Centre,..

ICT & Electronics


Success Factors: Costs

Quelle: Startup-bootcamp

Chișinău?

9


Quelle: Startup-bootcam


Chișinău?

10


Quelle: Startup-bootcam


Chișinău?

11

12

Silicon Roundabout in Old Street, London

� Silicon Roundabout (East London Tech City) is a technology cluster located in Central and East London in the Shoreditch area.

� It is the third-largest technology startup cluster in the world after San Francisco and New York City.

� TechHub London : community and workspace for tech entrepreneurs. Helps startups get better faster. London sites as well as locations in Riga (Latvia) and Manchester.

� Focused on tech entrepreneurs, providing places where they can work, meet, collaborate, network, learn and have fun.

� TechHubs planned in Bangalore, Bucharest and Berlin (2014)

13

Google Campus LondonCampus Office HoursNeed some expert advice? Each week you can gain valuable insight on online marketing, UI design, Android app monetization etc.

Campus TalksGoogle Campus inspires the community by opening doors to some of the world’s most outstanding thinkers.

Media Device LabLargest public device lab, offering more than 20 mobile devices for developers to test their apps across operating systems.

� Campus London is a 7-storey building and a coworking- and event locationfor the Startup-Community at the heart of Tech City,

� offers an environment that encourages innovation through collaboration, mentorship, and networking.

� Supporters: KPMG, Barclays Bank, McKinsey & Company, Silicon Valley Bank, Taylor Wessing.

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Success Factor: Location. Examples in BerlinBy getting the right people together in a physical space, good things

happen.

15

TU Gründerwerkstatt (founders lab)

� Directly at the Technical University of Berlin (TUB)

� Offers space for graduates, Ph.D. students from TUB who want to start a business.

� Labs availalbe for chemistry etc.� EU-scholarships for 1 year� Start-up week (education)

Technical University Berlin

16

Co-working space „Unternehmerhelden“ in Berlin

� Privately held by real estate investors

� Co-working Space in Berlin

� Flexible or fixed work place

� Meeting rooms available

� Infrastructure: printer, flatscreen, telefon

� Logo at the door?

„Hub:raum “ (Berlin) as an example of a corporate drivenco-working space

� Founded 2012; Incubator- and accelerator program of Deutsch Telekom� Berlin – Krakow – Tel Aviv� 15 selected start-ups (web, mobile, digital economy, media, telecom) receive seed

funding of 150.000 – 300.000 €.� hub:raum / mentors hold a minority stake in the firms in cooperation with T-Venture.� Free of charge for 1 year: Office space, mentoring and coaching by 25 experts,

marketing support� Recent Start-ups include education platform Blinkist (www.blinkist.com/) and

design-platform www.stylemarks.de.� „Leveraging“: due to the partnership with Deutsche Telekom developed

products/apps/services of the start-ups can be integrated in the portfolio ofDeutsche Telekom (e.g. t-online.de, ClickandBuy, Strato, Top App, etc.).

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CHIC (Charlottenburg Innovation Center) as an exampl e of an IT-park and Fokus Teleport

CHIC� close to Technical University of Berlin and scientific

institutions (Heinrich-Hertz-Institu, FraunhoferSociety).

� Dedicated for innovative start-ups / creative or growing companies with close links to research.

� Firms must be younger than 7 years� Founded in 2011 (1.500 qm), expansion in 2014

(4.000 qm) � Office rents below market level. 1 year rental

contracts can be terminated with 4 weeks notice. � 26 companies (electronics, energy technologies,

ICT, software, media, computing technology)

Fokus Teleport • former factory converted into a service

center for computer- and electronics industry in 1987 – 1990.

• 50.000 m2 available for all companies and service centers, business process outsourcing

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Berlin Adlershof Science & Technology Park!� With 4,2 square km one of the 15 biggest science parks worldwide and most important

science, media & business site in Berlin� 1000 innovative businesses, Humboldt University and 11 non-university research institutes� Also home to a residential area� 20 years development 1 bn. EUR investment for infrastructure, buildings, laboratories,

science institutions. 70% public money (EU, national, regional funds)� Adlershof Project GmbH is the urban development agency and sells plots to businesses� Wista Management GmbH establishes and manages technology centers, supports start-

ups and encourages networking events. Communication & Marketing.� Preseed/Seed – Incubation – Growth – Expansion

Center for IT and media technologyAdlershof Technology Park


Conclusions from international experience

� Different spaces for different company types needed!� Co-working spaces and incubators only work when coaching, mentoring,

and courses are offered. (e.g. business plan design, user interface design, gamification, 6 ways to finance your start-up. etc.; “office hours”)

� Also IT parks for growth companies should offer support such as job recruitment, international expansion, trade shows, conferences, contact to blue chip companies, match making, R&D support, innovation management, etc.

� Some standard are a must: bandwidth 100 MHz, at least CAT 5 data transmission, 100 Mbit/sec, “fast ethernet”

� Package prices for furnished offices are a plus for start-ups that include rent, electricity, telephone, internet, use of meeting rooms

� Depending on the type of companies that should be attracted, new as well as refurbished of buildings can match the requirement.

� Clear focus on what industry/sector should be targeted important. Proximity to cluster an advantage!

� Segment – target- position� Successful incubators often linked to a successful big company


Cornerstones of Moldova’s IT Park concept

1. Which target industries and companies?

International experience

Suited to Moldova’s requirements

2. Who should manage the park?

3. Which location?

4. What kind of buildings and facilities?

5. Which Support services?

6. Education offer?

7. Incentives and regulatory exemptions needed?

Target

Management

Buildings

Support

Education

Incentives

Location


IT Parks should target Moldova’s existing strengths

Target

Management

Buildings

Support

Education

Incentives

Location

Target industries Target companies

� Successful parks based on host country’s existing products and services

� Moldova has a successful software development and IT services sector

� E.g. Endava, Allied Testing, Pentalog and CEDACRI

Conclusion: Focus on IT services to leverage existing experience and value chain

� Which type of companies should be targeted?

� Large or small?

� Start-up or established investors?

� Our view: Target both groups

� However: Keep in mind that each group has different requirements


How should the IT Park be managed

Target

Management

Buildings

Support

Education

Incentives

Location

� An IT Park is essentially a business undertaking� Essential: Management with expertise and incentives to turn IT Park

into successful, competitive “product”Question: How to make sure management has skills and incentives?

Example Berlin: � Most IT Parks privately organised companies in public ownership� That way can offer attractive salaries � Example: CEO of CHIC Charlottenburg previously co-founder and

CEO of multi-million dollar private enterprise� Public ownership ensures long-term orientation


Location, location, location

Target

Management

Buildings

Support

Education

Incentives

Location

Need to attract young, bright, cosmopolitan type workforce (who could also chose to work anywhere else in the world)

Our view: Chisinau City Centre is the only option

• Close proximity to urban and social infrastructure (e.g. Prenzlauer Berg vs. Brandenburg)

• Close proximity to university / higher education

• Chisinau airport relatively close

• But does not have to be the top location downtown (example London Tech Hub, “silicon roundabout”)


Buildings and facilities

Target

Management

Buildings

Support

Education

Incentives

Location

“Young people working self-employed do this to escape the tread-mill of corporate life – so they do not wish to work in place that could as well be the

offices of an insurance company or public administration”

Found of IT Start-up ‘Spotistic’


Buildings and facilities

Target

Management

Buildings

Support

Education

Incentives

Location

Requirements for Moldova’s IT Park

� Clean, attractive, state of the art work spaces

� Refurbished or purpose built as long as contemporary

� “Plug and play” infrastructure

Start-ups and SME Established companies

� Co-working essential

� Options for exchange and socialising

� Large open canteens and cafés

� “Defunct factory feel”

� “Coolness”

� More functional approach

� Representative and stylish

� Flexible room architecture


Support services allow businesses to focus on … business

Target

Management

Buildings

Support

Education

Incentives

Location

� Main obstacle: Poor investment and business climate

� For established companies: Additional risks and costs

� For SME and start-ups: Always have the chance to go “underground”

Role of IT Park: administrative and business support services

� „Single window“ support with permits, licences and other dealings with public authorities

� Subsidised business support services such a legal, financial and tax advice

� Technical and IT support


Education centre to provide steady flow of recruits

Target

Management

Buildings

Support

Education

Incentives

Location

� Lack of suitably qualified graduates largest constraint for sector development

� Quality not a quantity problem

To address problems IT Park should offer an

Education Centre:

� Finishing school offering post-graduate course

� Objective: Provide commercial IT and business skills demanded by investors

� Dual system: Parallel train and work


Incentives and regulatory exemptions should be selected carefully

Target

Management

Buildings

Support

Education

Incentives

Location

� Should incentives be offered? � If so, which?� Outright subsidies, tax and / or regulatory exemptions

Our view:� If done right no outright subsidies needed� But case for subsidized rent for first 3 years� Additionally low cost business services for SME and Start-ups� Protection from arbitrary inspections (use existing legislation)� Authorities could guarantee a fast track for permits etc.

Supporters Contra

“Needed amidst stiff international competition“

“Money will be pocketed by companies that whould have

invested anyway”

“Ugly side effects”


Moldova’s IT Park: Get the product offering right

Distinctive advantage compared

to outside IT Park

World class infrastructure

Low administrative

burden

Easy for residents to collaborate

Cost advantage

Low cost business services

Steady supply of qualified

staff


Contact

Jörg [email protected]

BE Berlin Economics GmbHSchillerstr. 59, D-10627 BerlinTel: +49 30 / 20 61 34 64 0 Fax: +49 30 / 20 61 34 64 9

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A Blue Print for an Information Technology Park in Moldova · TechHub London : community and workspace for tech entrepreneurs. Helps startups get better faster. London sites as well